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INDEPENDENT . INCISIVE . ANALYTICAL weeklycuttingedge.com May 16-31 2019 Vol# 14 Issue # 19 Rs. 100 Diplomacy Pak-China ties: New horizons Prime Minister Imran Khan’s four-day visit to China besides writing a new chapter in Pak- China relations, proved an occasion to present to the world the image of Naya Pakistan – dem - ocratic, dynamic and dedicated to the welfare of its people. It was Prime Minister Imran Khan’s second official tour of China with focus on multiple objectives. Nasim Ahmed Pg 05 Divide Fears after Sri Lankan attacks The recent terror attacks have widened ethnic and religious divides in Sri Lanka. Christians fear more attacks and Muslims face reprisals from them and the government, which has Cover Story given a new dimension to violence in the coun - try. Experts say the Easter Sunday attacks have brought the island nation to the forefront of the global terrorism discourse. Over to IMF Shahid Hussain Shahid Hussain Page 4 Pg 10 Roundup Our guide to keeping you updated on the latest news and reviews from around the world. Art and Culture. Film. Books. Health. Science Pg 23 Editor: Dr. Niloufer Mahdi Index CUTTING EDGE Viewpoint Page 4 Economics Page 15 Over to IMF Unsustainable public debt Education Page 5 Diplomacy Page 16 Pak-China ties: New horizons Shortage of teachers in South Punjab Colleges Debate Page 6 Curbs Page 18 The shrinking frontiers of press The way forward for Pakistan freedom Apathy Conflict Page 19 Page 7 The PTM problem After Nishwa’s death Digital marketing Inflation Page 20 Page 8 Constraints in IT industry of Pakistan The vicious cycle of price hike Initiative Trade Page 21 Page 9 Belt and Road Forum opportunities Gains from the Belt and Road Initiative Your View Page 22 Divide Letters to the editor from Page 10 our readers Fears after Sri Lankan attacks Round Up Page 23 Transition Books & movies, Health, Science Page 11 PML-N breaks free from Sharifs? Page 12 Terror Cutting Edge Daesh in South Asia Editor Strategy Dr. Niloufer Mahdi Page 13 Layout Design Unelected advisers and system’s viability Rizwan Ahmad Communication Manager Page 14 Analysis Usman Riaz The massive revenue shortfall Correspondence: [email protected] Admin/Marketing Muhammad Atique Circulation Manager Please send your letters to Samsoon Masih [email protected] Ediorial Office: or post to Treet Corporation Limited “Your View”, 2-H, Gulberg-II, Lahore Treet Corporation Limited Phone +92-42-35817141-47, Fax: +92-42-35817138 2-H, Gulberg-II, Lahore [email protected] [email protected] [email protected] Readers are welcome to Printed by Creative Vorks, write for the paper. Plot# 203, Green Light Street, Please include Mughal Park, Bund Road, Lahore. full name and address. For subscription, please contact [email protected] May 16-31, 2019 Economics Over to IMF Shahid Hussain In a significant development, the government has removed the State According to a new document prepared by the World Bank, titled Bank of Pakistan (SBP) governor and the Federal Board of Revenue Pakistan Revenue Mobilisation Project, Pakistan has substantial po - (FBR) chairman. The appointment of two International Monetary tential to increase tax receipts without imposing new taxes or increas - Fund (IMF) experts in their place is being seen by the opposition as ing their rates. The country’s tax revenue potential would reach 26pc handing over the economy to foreigners while the government claims of GDP, if tax compliance were to be raised to 75pc, which is a real - it will bridge widening financial gaps in the country. istic level of compliance for lower middle income countries. This The changes were expected after the removal of Finance Minister means that Pakistan’s tax authorities are currently capturing only half Asad Umar. It is said the sacking of the two key officials had been of the revenue potential — the gap between actual and potential re - decided even before showing the door to the former finance minister. ceipts is 50pc, it noted. SBP Governor Tariq Bajwa was asked to resign while he was in Is - Dr. Reza Baqir of the International Monetary Fund (IMF) has been lamabad for talks with the IMF. The development came on a day appointed governor of the State Bank of Pakistan (SBP) to serve for when Prime Minister Imran Khan had hinted at further changes in his a three-year term. He has worked with the IMF for the last 16 years. cabinet in the days ahead. However, no official reason was given for He has been the chief of the IMF’s Debt Policy Division and worked his dismissal. There was no indication from the government that it on IMF policies on external debt sustainability and restructuring of was unhappy with his performance. The SBP governor and the FBR member countries. He has also helped design debt and fiscal policies chairman are key players in any IMF programme. The governor is ac - for crisis-hit countries like Greece and Ukraine, among others. Before tually one of the signatories to any programme while the FBR chair - the IMF, Dr. Baqir worked at the World Bank, the Massachusetts In - man is tasked with meeting the revenue target. stitute of Technology and the Union Bank of Switzerland. However, both former Finance Minister Asad Umar and Prime Syed Shabbar Zaidi, a Karachi-based partner in the chartered ac - Minister Imran Khan had given public statements expressing their counting firm A.F. Ferguson, was appointed the new chairman of the disappointment with the performance of former FBR Chairman Ja - Federal Board of Revenue (FBR). He is the third person from the pri - hanzeb Khan. The performance of the department was so pathetic vate sector to hold the post. The decision did not go down well at the under him that Prime Minister Imran Khan once threatened to dis - FBR where the Inland Revenue Officers Association issued a harsh band it and make a new authority to collect taxes. In his tenure, the statement and threatened to move court against it. Spelling out his FBR faced the highest revenue shortfall in Pakistan’s history. The fig - priorities, Zaidi promised to build trust between the state and the tax - ures during the first nine months of the current fiscal year show that payer. “This is done through automation, minimising contact between aggregate revenue under the income tax, sales tax and federal ex - tax man and taxpayer, and by promoting a voluntary compliance that cise duty was Rs2.186 trillion, posting a shortfall of Rs303 billion will automatically lead to base broadening. The term “base broaden - against the Rs2.488tr target set for the period. However, during the ing” has been overused. Once we take the steps, they will automati - same period, custom collections surpassed the set target of cally lead to base broadening,” he added. He called the system Rs509.3b, clocking in at Rs510.11b. Despite buoyancy in the cus - “anti-tax” and said he wanted to change it. toms collection, it is estimated that the annual shortfall in revenue Reacting to the new appointments, the Pakistan Muslim League- collection from all taxes will be around Rs450b by the end of the on - Nawaz (PML-N) and the Peoples Party (PPP) have feared that the going fiscal year. country’s nuclear programme could come under threat after the ap - Income tax revenues, including those collected at the import pointment of “IMF representatives”. They claimed the government stage, recorded a shortfall of Rs178b after total collections clocked had handed over the country to “the East India Company”, a refer - in at Rs984b against the target of Rs1.162tr for the period under re - ence to the British trade company through which Britain established view. Sales tax collection posted a shortfall of Rs116b as the rev - its rule in the Indian sub-continent in the 18th century. They said it enues reached Rs1.039tr against the target of Rs1.155tr projected appeared the IMF was relocating its offices to Pakistan. for the first nine months of the current fiscal year. Federal excise duty On the other hand, the government believes the new appoint - collections also posted a shortfall of Rs8b as revenue collected ments will steer Pakistan out of the economic crisis. Experts say reached to Rs163b against the target of Rs171b projected for the Prime Minister Imran Khan has realized that the economy needs the same period. Poor revenue collection during the ongoing fiscal year help of experts, instead of politicians. The appointment of experts as is worrying since the tax base was already eroded by Rs90b shortfall finance minister, SBP governor and FBR chairman may not be good in last fiscal year’s collections. During the previous fiscal year, total for the people of the country, because they would end subsidies for collections clocked in at Rs3.844tr against the target of Rs3.935tr. them, but put the country on the path to self-reliance. 04 May 16-31, 2019 Diplomacy Pak-China ties: New horizons Nasim Ahmed Prime Minister Imran Khan’s four-day visit to China besides writing a new chapter in Pak-China relations, proved an occasion to present to the world the image of Naya Pakistan – democratic, dynamic and dedicated to the wel - fare of its people. It was Prime Minister Imran Khan’s second official tour of China with focus on multiple objectives. During the visit, he interacted with leaders of various countries gathered there and also exchanged views with heads of various in - ternational financial institutions. The basic objective was to attend the Second Belt and Road Forum but it was an opportunity to engage more deeply with the Chinese leadership in the joint compact to advance the goals of regional and global peace and progress.